Economic GDP Surge of 5.7 Percent, Largest Growth in 6 Years
January 29, 2010
(ChattahBox)–An unexpectedly positive economic report issued Friday by the Commerce Department, shows signs that the nation’s stagnant economy is slowly climbing out of its deep recession. The report found that the gross domestic product expanded at a 5.7 percent annual rate in the fourth quarter, which is the largest increase in more than six years. The rapid growth in the GDP points to a sustainable recovery in the months and years ahead.
During 2009, the economy contracted 2.4 percent, which represents the largest drop since 1946. The GDP began to grow slightly in the third quarter and rose significantly by the year end, which is attributed to firms not slashing inventories as severely as previous quarters.
Consumer spending also contributed to the nearly six percent growth in GDP. According to the economic report, consumer spending increased at a 2 percent annual rate, contributing 1.44 percentage points to GDP. In the third quarter, consumer spending had risen at a 2.8 percent pace, spured by the government’s “cash for clunkers” program.
Business investment also showed signs of recovery. Business investment grew at 2.9 percent rate, which represents the first increase since the second quarter of 2008.
The one sour note in the report was a steep decline in housing starts.The growth of spending on new home construction slowed in the fourth quarter to an annual rate of 5.7 percent, down from an 18.9 percent growth rate in the third quarter.